Crypto Bounces, Polygon Migrates to POL
Market Update
U.S. Treasury yields are dropping following softer-than-expected JOLTS data, showing 7.67 million job openings in July versus 8.1 million expected. The US10Y has fallen below 3.8%, with the 10Y-2Y spread briefly un-inverting. Equities are flat on the day, with the SPY 1.00% and QQQ 1.31% increasing less than 0.1%. Crypto is showing relative strength, with BTC -1.27% rebounding to $58.3k after reaching a low of $55.5k last night. ETH -0.70% is gaining alongside Bitcoin, reclaiming the $2,480 mark. AAVE 1.29% is among the top gainers today, rising over $137 following news that World Liberty Financial (Trump-affiliated crypto project) announced it is building a DeFi project on top of Aave and Ethereum.
Polygon Token Migration
Polygon has initiated its token migration from MATIC -1.84% to POL, with POL becoming the new native gas and staking token on the Polygon PoS network. POL will maintain MATIC’s tokenomics with a total supply of 10 billion tokens, which can be converted from MATIC at a 1:1 ratio. Additionally, there will be 2% annual emissions, with 1% going to validators and 1% to the community treasury. Users holding MATIC on Polygon PoS do not need to take any action to migrate their tokens into POL, but holders on other chains will need to utilize Polygon’s migration contract. The token migration will support Polygon 2.0 and its efforts to become a zk-powered network and integrate with AggLayer, its chain aggregation layer. POL will have enhanced utility in Polygon 2.0, including supporting block production, ZK proofs, and data availability committees (DACs).
Penpie Exploited for $27 Million
Penpie, a defi project built on top of Pendle, was exploited yesterday for approximately $27 million. Penpie allows users to deposit Pendle yield tokens into the protocol and optimize rewards. The exploit was caused by a malicious contract used to inflate the hacker’s staking balances, which consequently led to outsized rewards being allocated. Pendle confirmed that the vulnerability was due to the permissionless nature of Pendle token listings on Penpie and that its in-house security system immediately detected the malicious contract. In response to the exploit, Pendle froze multiple of its contracts, preventing an additional $105 million from being drained from Penpie. All funds on Pendle were kept safe and contracts have been unfrozen, although Penpie remains paused. Penpie stated they would negotiate with the hacker, offering a percentage of stolen funds as a bug bounty and no legal action pursued in exchange for returning most of the funds. PNP -3.79% , the native token of Penpie, fell more than 33% following the exploit, and PENDLE -4.63% fell marginally but has gained over 4% today.
Technical Strategy
Aave has managed to gain ground in July, despite being in a tough crypto environment. Daily charts since this past Spring show the formation of a large bullish base, which I suspect should lead to a coming breakout back to new monthly highs. AAVE 1.29% initially found strong resistance near March 2024 peaks and its August rally stopped within $1 of this former level from five months ago before showing mild consolidation. However, volume has been expanding on recent gains, and today’s gains back above $137.50 are happening on the highest volume of the year. This is bullish accumulation, technically and should lead to a coming test and breakout above $150, en route to $203, with intermediate-term targets near $300. Overall, AAVE looks attractive here, and “following the volume” so to speak looks like the right idea, technically.
Daily Important Metrics
All metrics as of 2024-09-04 13:24:16 All Funding rates are in bps Crypto Prices
All prices as of 2024-09-04 12:00:11 Exchange Traded Products (ETPs)
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